Which of the Following Statements Is True

question 78

Multiple Choice

Which of the following statements is true?

• A)If a consumer is in equilibrium, it does not necessarily follow that he or she is also achieving the greatest total utility.
• B)If a consumer is in equilibrium, it necessarily follows that he or she is also achieving the greatest total utility.
• C)If a consumer is attaining the greatest marginal utility, then it necessarily follows that he or she is also achieving the greatest total utility.
• D)If a consumer is attaining the greatest total utility, then it necessarily follows that he or she is also achieving the greatest marginal utility.

---

Definitions:

Escalating Inflation

A situation where the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling, accelerates over a period.

CPI

The Consumer Price Index measures the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

Purchasing Power

A measure of the value of currency, expressed in terms of the quantity of goods or services that one unit of money can buy.

Nominal Interest Rates

The rate of interest before adjustments for inflation, reflecting the price of borrowing money.